Potential ballot measure seeks to force DWP to take ax to budget.

A ballot proposition now under review by the L.A. city attorney's office would force the Department of Water & Power to slice $200 million from its budget, presumably by cutting about 2,500 jobs, and return the money to sewer service charge ratepayers.

The proposition was submitted to the city attorney for legal review, as is customary before circulating an initiative petition, by Carol Knapp, a member o the Apartment Owners Association Political Action Committee and chairwoman of the Coalition for Fairness in Water/Sewer Rates.

Knapp plans to begin collecting signatures next month, in order to have the ite placed on city ballots in June 1995.

With the help of the AOA and other property owner/business groups that support the idea, Knapp would have to collect 120,000 signatures, under election law, t have the item put before Los Angeles voters.

The proposal is based on a DWP audit last May that said 2,300 to 2,900 jobs should be cut at the city utility to make the DWP more efficient and more competitive with private utilities. The state is expected to soon deregulate utility companies, allowing industrial companies by the year 1996 to choose their electricity providers, noted DWP public affairs director Mike Moore.

However, the audit, done by a New Hampshire-based consulting firm hired by the L.A. City Council, called for the cuts to be made over five years through attrition, and city officials have indicated they would like to spend any money saved at the DWP on hiring police officers -- not rebating customers.

The DWP already transfers revenue to the city's general fund each year ($200 million this year), and the International Brotherhood of Electrical Workers, which represents the largest group of DWP employees, has sued the city over thi practice, claiming it violates the city charter.

Assistant City Attorney Kenneth Downey said Knapp's proposal also may require a amendment to the city charter, which can be accomplished only through a ballot initiative (not a council ordinance).

Knapp's ballot proposition also would order a management audit of the wastewate capital improvement program, which funds improvements to the sewer system. Again, any excessive spending would be cut and refunded to ratepayers.

"They'd have to lay off a lot of people, but everybody has been laid off or had their salary reduced (in the private sector)," said Knapp. "They (DWP employees get higher pay than they get at other utility companies. They're just going to have to bite the bullet. We cannot support their high style of living while others are starving."

Knapp was apparently referring to a 1993 controversy that helped sparked the L.A. City Council's call for the DWP audit. In 1993, during a DWP union strike, DWP executives spent $800,000 on catered food. They also have been criticized for spending too much on airline flights.

Meanwhile, apartment owners and water-intensive businesses (such as coin-operated laundries and the Anheuser-Busch brewery) in Los Angeles have bee complaining for some time that their water and/or sewer service charges are too high and are driving them out of business.

Moore said the DWP is trying to comply with the recommendations in the audit, but needs to phase-in cost cutting gradually.

"We are after the objective of cutting costs as much as we can on that order of magnitude," said Moore. He noted that the sale of DWP assets accounted for a $7 million increase in the DWP's transfer to the city's general fund this year. However, cutting $200 million from operations immediately is "not realistic," h said.

"If you do it by edict, things don't get done," said Moore.

Knapp earlier planned a ballot proposition that would require that the city sel the DWP to a private utility company, but she said she decided that idea "opene all kinds of cans of worms and was too ambitious of a task."

Last year, the president of the Los Angeles Taxpayers Association, Jay Curtis, sent a letter to Mayor Richard Riordan's office, asking him to consider selling the DWP. He estimated its value at between $2 billion and $3 billion.

Curtis advocated incorporating the DWP, taking the company public and selling shares to stockholders on the open market. He said the issue should be put before Los Angeles voters.